Friday, 28 February 2020 11:48

ACCC chief raises competition concerns over large digital platform expansions Featured

ACCC Chair Rod Sims ACCC Chair Rod Sims

Competition authorities around the world must work together to meet significant and evolving challenges in global markets - including with the expansion of large digital platforms - and should consider whether traditional approaches to assessing mergers remained fit for purpose, according to Australia’s competition regulator, the ACCC.

Australian Competition and Consumer Commission Chair Rod Sims says the meteoric expansion of large digital platforms, much driven by acquisitions, was one of many challenges confronting global competition authorities.

Speaking at a dinner in Melbourne for the International Competition Network’s merger workshop, Sims said, “Recently, competition authorities around the world have been heavily challenged on whether our merger laws, and our application of those laws, is adequately achieving its goals”

“Some argue that high levels of concentration, and the resulting excessive profits, are responsible for reduced investment and innovation, growing inequality and, according to some, an undermining of democracy,” Sims said.

“These are questions that go not only to the health of the economy but also to the type of society that we want. While merger policy is not intended to solve for all these issues, the fact that they are raised suggests that the stakes are high.

“The evidence of whether our economies are too concentrated, and the consequences of this, can be seen as mixed. My judgement is that Australia’s economy is too concentrated.”

Sims noted that proposed mergers were often difficult for competition authorities to challenge, because such cases involved predicting the future state of competition with the merger.

And pointing to previous decisions of the Federal Court of Australia and the Australian Competition Tribunal, Sims said the weight given to the testimony of merger parties’ senior executives by the Court and Tribunal “posed an additional challenge for the ACCC”.

“My sense is that courts in some other jurisdictions are more sceptical of self-serving testimony by the merger parties,” Sims said.

“This applies to all merger reviews but is even greater when the market environment is rapidly evolving and incumbents are acquiring emerging and innovative new players.”

“Competition authorities could help each other on these challenges, Sims said, “particularly in matters involving global firms with complex and far reaching operations”.

“Google’s acquisition of Fitbit, which some authorities are currently considering, is a key example where we will all want to watch and learn from each other and we are seeing clear signs of that already. It is a very important matter,”

Sims said close engagement had benefited the ACCC when it considered multijurisdictional mergers.

“Importantly, it is also helping us now in looking at our own merger regime and asking if it remains fit for purpose,” he concluded.

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Peter Dinham

Peter Dinham - retired in 2020. He is a veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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